Correlation Between Exotic Food and Heng Leasing
Can any of the company-specific risk be diversified away by investing in both Exotic Food and Heng Leasing at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Exotic Food and Heng Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exotic Food Public and Heng Leasing Capital, you can compare the effects of market volatilities on Exotic Food and Heng Leasing and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Exotic Food with a short position of Heng Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exotic Food and Heng Leasing.
Diversification Opportunities for Exotic Food and Heng Leasing
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exotic and Heng is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Exotic Food Public and Heng Leasing Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heng Leasing Capital and Exotic Food is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Exotic Food Public are associated (or correlated) with Heng Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heng Leasing Capital has no effect on the direction of Exotic Food i.e., Exotic Food and Heng Leasing go up and down completely randomly.
Pair Corralation between Exotic Food and Heng Leasing
Assuming the 90 days horizon Exotic Food Public is expected to generate 1.21 times more return on investment than Heng Leasing. However, Exotic Food is 1.21 times more volatile than Heng Leasing Capital. It trades about 0.05 of its potential returns per unit of risk. Heng Leasing Capital is currently generating about -0.06 per unit of risk. If you would invest 1,183 in Exotic Food Public on August 30, 2024 and sell it today you would earn a total of 817.00 from holding Exotic Food Public or generate 69.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exotic Food Public vs. Heng Leasing Capital
Performance |
| Timeline |
| Exotic Food Public |
| Heng Leasing Capital |
Exotic Food and Heng Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exotic Food and Heng Leasing
The main advantage of trading using opposite Exotic Food and Heng Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exotic Food position performs unexpectedly, Heng Leasing can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Heng Leasing will offset losses from the drop in Heng Leasing's long position.| Exotic Food vs. Carabao Group Public | Exotic Food vs. Jay Mart Public | Exotic Food vs. Gulf Energy Development | Exotic Food vs. KCE Electronics Public |
| Heng Leasing vs. Amanah Leasing Public | Heng Leasing vs. Infraset Public | Heng Leasing vs. JMT Network Services |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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